Will cash make a comeback after COVID-19?
May 10, 2021
The use of cash has dipped during COVID-19, but looks likely to bounce back after the pandemic. Contactless adoption continues to be identifiable consequence of the pandemic, but the US is significantly behind other countries.
Lost in Transaction: Consumer payment trends 2021 was written using independent data commissioned by Paysafe and conducted by Sapio Research. The full results of this research are available to download here.
Is the move away from cash a permanent trend?
Cash remains an important element of the payments landscape, with only a very small minority of consumers committing to going completely cashless. And while the pandemic has clearly had an impact on cash usage in the short term, the long-term picture tells a different story.
Prior to the pandemic, only 44% of consumers made less than 25% of their in-person payments using cash, and only 9% of consumers were completely cash free. During COVID-19 this rose to 14%, potentially due to safety concerns, access to banks, or simply that stores were choosing not to accept cash. Overall, 58% of consumers were making less than 25% of their in-person payments with cash.
However, when consumers are asked to project their cash usage once the pandemic is over, these percentages fall back into closer alignment with the pre-COVID-19 figures. 10% of consumers plan to be completely cashless following COVID-19, only a 1% increase on pre-COVID-19 figures, and 50% of consumers plan to make at least 25% of their transactions using cash in the future.
Q: What percentage of in-person transactions would you complete using cash…
Has contactless adoption continued to remain strong throughout COVID-19?
In our consumer trends report published in 2020, we named rapid adoption of contactless payment as an identifiable trend in the early stages of the pandemic. Having asked consumers the same question again in 2021, it is clear that this trend has continued.
In every European country, the percentage of consumers that have never used contactless has fallen, as has the percentage of consumers that have not used contactless in the past month. And those that are using contactless are doing so more frequently; in every European country the percentage of consumers that paid via contactless at least ten times in the past month has increased, and the overall average number of contactless transactions consumers have made in the past month has already increased.
While it remains true the shift to contactless payments remains an identifiable trend, adoption in the US is still lagging behind Europe, with a third of US consumers still yet to use contactless for the first time.
Q: How often have you used contactless (either via card, smartphone or wearable device) as a payment method in the last month?
Is there a direct correlation between cash usage and contactless adoption?
To further investigate the relationship between cash and contactless payments, consumers were asked how they would make specific transactions before COVID-19 and today. And while cash is still a popular form of payment especially for lower value transactions, where propensity to pay with cash has fallen the shift has almost entirely moved to contactless payments. Overall, approaching a quarter (23%) of consumers prefer to use contactless payment methods for purchases over £30.
Q: For the following in-person transactions, if available which would be your preferred payment method to use a) before COVID-19 b) now?
So our data suggests that while cash payments did fall during the pandemic, consumers' appetite for cash payments hasn't been eroded. Contactless payments continue to be an increasingly important element of the payments ecosystem as more consumers familarise themselves with this technology, but COVID-19 and contactless adoption hasn't accelerated the decline of cash permanently and we will see a bounceback after the pandemic. In fact, 28% of consumers told us that they will not shop in stores that do not accept cash in the future (for comparison 24% of consumers said they would not shop in stores that do not accept contactless payments), demonstrating the value cash still has as a payment method.
The survey was conducted among 8,111 consumers (representative by age and gender) in the U.S. (2,000), UK, Canada, Germany, Austria, Bulgaria, Italy (all 1,000). The interviews were conducted online by Sapio Research in March - April 2021 using an email invitation and an online survey.
The use of any third-party brand names in this report is for illustrative purposes only. Consumer attitudes to the specific brands were not considered or analysed as part of the research this report is based on and this report does not represent Paysafe’s or any other party’s views towards the brands themselves or the services they represent.